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  • Sequestration: Spending Cuts Needed, but Get the Policies Right

    Tonight’s presidential debate is a good opportunity for President Obama and Governor Mitt Romney to tell the nation what they would do about our spending crisis and the looming fiscal cliff—in particular, the problem of the automatic defense budget cuts.

    Leadership on this issue is crucial. Some conservative lawmakers are at risk of conceding the automatic defense budget cuts for the sheer sake of cutting spending. Representative Jim Jordan (R–OH), chairman of the Republican Study Committee, has most recently voiced this notion: “I would say the only thing that’s worse than cutting national defense is not having any scheduled cuts at all take place.”

    Jordan is absolutely right that Congress should reduce spending, but the policy is just as important. Relying on cuts that would jeopardize our security would be harmful. Instead, Congress should offset the defense sequestration with spending reductions elsewhere and preserve the military’s ability to protect the country.

    House and Senate leadership played a part in cutting the original debt limit deal that got Congress into this situation. Many today admit that they signed on to the Budget Control Act because they were promised that sequestration would never actually happen. It’s a present reality, though, and they need to act.

    Then, earlier this year, the Senate failed to act when the House passed its reconciliation plan that would have protected the defense budget. Senate Majority Leader Harry Reid’s (D–NV) insistence on including substantial tax increases in any measure that would move forward has created this situation.

    Nevertheless, sequestration is poised to strike. Stripped of $492 billion, or nearly 10 percent of its budget, over fiscal years 2013–2021, the already reduced defense budget would be hit disproportionately. Meanwhile, entitlement programs—the greatest drivers of spending and future deficits—would be virtually left off limits. (continues below chart)

    The gaping hole in defense funding would deteriorate our military’s readiness. Indeed, the threat of sequestration is already adversely affecting America’s ability to respond to growing threats. These cuts would leave the U.S. with its smallest Army since World War II, its smallest Navy since World War I, and its smallest Air Force ever—and this at a time when the world is not growing safer but more dangerous every day. (Russia, China, Iran, and resurgent Islamist terrorists are just a few of the threats.)

    Few disagree that the Department of Defense could and should be made more efficient and frugal, but the idea that any budget cut is a good one doesn’t hold up. Reforming defense procedures (such as acquisition and procurement, redundant capabilities like medical services, and having every service have its own tech certification process) requires specific legislative solutions that would not be accomplished by these across-the-board cuts.

    Further, any budget savings should be put back into the military for modernization and other needs. The only thing the sequestration would do is reduce readiness to a less than acceptable level.

    Budgeting is about setting priorities. That means directing the government’s fiscal resources where they are needed and spending within our means. Sequestration accomplishes neither. Simply slashing discretionary spending is in no way to prioritize resources, nor does it fulfill the core function of government: protecting our interests at home and abroad.

    Further, by all but shielding the entitlement programs, Congress is failing to address a most predictable spending and debt crisis—all while continuing to make promises to Americans that it cannot keep.

    Congress should demonstrate that it is serious about reining in federal spending. It cannot do so without getting entitlement spending under control. With millions of Americans starting to retire and health care costs climbing, spending on Medicare, Medicaid, and Social Security—the main three entitlement programs—is on course to double as a percentage of the economy by 2050.

    Gutting the nation’s defense capabilities, however, is not the responsible way to budget or achieve budget savings. Even eliminating defense completely wouldn’t balance the budget, because entitlement program spending would continue to soar. (continues below chart)

    As Jordan stated, we do need spending cuts. All spending cuts, however, are not created equal. Lawmakers should work to enact the right budget policies. Offsetting at least the 2013 defense sequestration with spending cuts elsewhere would give Congress time to address the remainder of sequestration and turn to solutions for long-term budget issues such as entitlement reform.

    Congress should not trade harmful defense cuts for a quick, harmful budget deal. Leadership up to the highest level is essential on this issue—leadership that can provide solutions for how to address our spending crisis while ensuring that the military has the resources it needs to keep the nation safe.

    Posted in Economics [slideshow_deploy]

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